Some questions for various old monetarists, Austrians, gold bugs, and other conservatives:
1. Japan has had interest rates near zero for nearly 2 decades. Is this easy money, despite an NGDP that is lower than in 1993? Despite almost continual deflation? Despite a stock market at less than one half of 1991 levels. Despite almost continually falling house prices? If it’s easy money, how much longer before the high inflation arrives?
2. The US has had near zero interest rates for more than 5 years. Is this easy money? If so, how much longer until the high inflation arrives? If rates stay near zero for 2 more years, and inflation stays low, will you still call it easy money? How about 5 more years? Ten more years? Twenty?
I constantly hear conservatives complain that elderly savers can’t earn positive interest rates because of the Fed’s “easy money” policy. Is there any time limit on how long you will make this argument, before throwing in the towel and admitting rates are low because of the slowest NGDP growth since Herbert Hoover was President? Or is your model of the economy one where decades of excessively easy money leads to very low inflation and NGDP growth?
In other words, is there some sort of model of monetary policy and nominal interest rates that you have in your mind, or do you see easy money everywhere and tight money nowhere? What would tight money look like? What sort of nominal interest rates would it produce?